Bull etf or Bear etf, which one to use? Hi all, If I want to express a bullish view on SP500, I have two theoretically equivalent options (I am thinking of 2x or 3x): 1. Long the bull 3x etf 2. Short the bear 3x etf The holding period is probably 3 months, 6 months and 12 months. Which one shall I hold, the bull or the bear? Thank you!
Well, shorting the short to give you long exposure is the sensible thing to do given that you will be able to collect the value of the price decay. As stated above, I would read the prospectus because levered ETFs give you DAILY returns not monthly or yearly. They are NOT made for long term buy & hold investments. If you want leverage try using options on an index or non-levered ETFs. Take a look at the long term performance of UPRO and SPXU vs. SPY and the S&P.
What's the fee structure of borrowing for shorting? Given the well-known price decay I would imagine it's pretty expensive to short?
Not really. Turns out that shorting the bull and bear 3x ETF (done properly) returns about 7-8% annually. Although I haven't done this specifically for SPY 3x ETFs. Point is, you're paying for the leverage either way.
Sorry -- I didn't mean that I've actually done this. I've only done the simulation (so no fees). I don't know about the short selling fees, but I assumed that they would be more than the expected profit, so that's why I didn't do it.